CB LEI: Rise in March

The latest Conference Board Leading Economic Index (LEI) for March was up 0.3% from the February final figure of 119.5.

The Conference Board LEI for the U.S. increased again in March. Positive contributions from most of its components more than offset a large negative contribution from consumer expectations for business conditions. In the six-month period ending March 2022, the leading economic index increased 1.9 percent (about a 3.8 percent annual rate), much slower than its growth of 4.4 percent (about a 9.1 percent annual rate) over the previous six months. However, the strengths among the leading indicators remain more widespread than its weaknesses.

The Conference Board CEI for the U.S., a measure of current economic activity, also increased in March. The coincident economic index rose 2.2 percent (about a 4.4 percent annual rate) between September 2021 and March 2022, faster than its growth of 0.9 percent (about a 1.9 percent annual rate) for the previous six months. However, the strengths among the coincident indicators have remained very widespread, with all components advancing over the past six months. The lagging economic index also continued to rise, but at a higher rate than the CEI. As a result, the coincident-to-lagging ratio declined in March. Real GDP expanded at a 6.9 percent annual rate in the last quarter of 2021, up from 2.3 percent (annual rate) in the third quarter. More

Here is a log-scale chart of the LEI series with documented recessions as identified by the NBER. The use of a log scale gives us a better sense of the relative sizes of peaks and troughs than a more conventional linear scale.

Conference Board's LEI

For additional perspective on this indicator, see the latest press release, which includes this overview:

The Conference Board Leading Economic Index® (LEI)for theU.S. increased by 0.3 percent in March to 119.8 (2016 = 100), following a 0.6 percent increase in February. The LEI increased by 1.9 percent in the six-month period from September 2021 to March 2022.

“The US LEI rose again in March despite headwinds from the war in Ukraine,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “This broad-based improvement signals economic growth is likely to continue through 2022 despite volatile stock prices and weakening business and consumer expectations. The Conference Board projects 3.0 percent year-over-year US GDP growth in 2022, which is slower than the 5.6 percent pace of 2021, but still well above pre-covid trend. This rate also reflects a 0.5 ppt downgrade incorporated in our base case to include the effects of the war in Ukraine compared to before the war (3.5 percent). However, downside risks to the growth outlook remain, associated with intensification of supply chain disruptions and inflation linked to lingering pandemic shutdowns and the war, as well as with tightening monetary policy and persistent labor shortages.”

For a better understanding of the relationship between the LEI and recessions, the next chart shows the percentage-off the previous peak for the index and the number of months between the previous peak and official recessions.